Article 6/9/d of the Income Tax Act states that an employer may provide non-monetary benefits to an employee in the form of use of recreational, medical or educational facilities (e.g. language courses, wellness), contributions to cultural or sporting events (e.g. cinema or theatre tickets), while these benefits are exempt from income tax (including social security and health insurance) on the part of the employee.

In judgment No. 29 Af 89/2018-68 of December 2021, the Brno regional court dealt with a dispute, where the employer provided employees with allowances for health care and the use of sports facilities or cultural events, but in monetary form (by reimbursing the costs incurred).

The regional court held that it is necessary that the funds be used for the given purpose, as if they were spent by the employer. If an employee purchases a theatre ticket and presents a receipt to the employer, the purpose is fulfilled and it does not matter that the payment to the supplier was not made directly by the employer.

The regional court therefore confirmed that the conditions for exempt income of an employee are also met by a benefit that is paid in such a way that the employee pays for the goods or services himself and the employer provides him with earmarked funds against demonstrably incurred expenses or in advance. A cassation complaint has currently been submitted to the Supreme Administrative Court for this case. We will continue to monitor further development for you.

Author: Roman Burnus, Valérie Kovářová